• Management & Information Systems Review
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• v.35 no.2
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• pp.83-97
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• 2016

The purpose of this study is to evaluate our system and consider how the tax rules on corporate reorganization and asset adjustment account can be improved. The scope of this study includes the Korean tax rules on corporate reorganizations, as well as key tax benefits provided by the Special Tax Treatment Control Act. In case of Korea, The relevant regulations and system of taxation respecting the merger has been made the rapid progress in several respects in this situation, there are capable of improvement. This paper suggests improve some problems on tax avoidance abusing incomplete tax law. First, the asset adjustment account is the difficulty that it needs to follow-up during this period of time, as well as the complexity of the accounting and tax adjustments on the practice. If it is permitted to succeed asset-liability as market value, the complexity of asset adjustment account in corporate tax accounting also disappear. Second, in case that controlling shareholders possess more than 20% of merged entity, they could not get the tax deferral until after the time of two years has elapsed. It needs to further alleviate the merged entity ratio than the present level. Finally, after the merger it will be to strengthen the surveillance provisions of five years from the current two years. In addition, continuity of shareholder's requirements and business requirements, it is also necessary to strengthen the requirements of the follow-up provided by a separate regulation.

• The Journal of Small Business Innovation
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• v.20 no.1
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• pp.1-18
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• 2017

This study examined whether divided and spun-off companies design and execute spin-offs to minimize tax burdens by analyzing multiple spin-off transactions in the Dongbu Group, when the Korean tax law regarding corporate restructuring was amended in July 2010. Before the July 2010 tax amendment, taxes on the capital gains arising from the qualifying spin-off were deferred to the earlier of the shares in or assets acquired by the spun-off company are disposed. This tax treatment relieves the divided company's tax burden by deferring taxes on capital gains, compared with non-qualifying spin-offs. However, if shares in or assets acquired by the spun-off company are disposed after the July 2010 tax amendment, the capital gain incurred at the time of the qualifying spin-off would be taxed again at the spun-off company, in addition to a taxation on the divided company's capital gains. This creates double taxation implications for the parties involved in the spin-off. As a result, the double taxation may outweigh the benefit from the tax deferral on the qualifying spin-off, which may make a qualifying spin-off tax unfavorable. Among the four spin-off cases in the Dongbu Group addressed in this study, a spin-off occurred before the tax amendment, whereas three spin-offs occurred after the tax amendment. Initially, we expected that the spin-off before the tax amendment would be a qualifying spin-off, and the other three spin-offs would be non-qualifying spin-offs, considering the taxation rules before and after the July 2010 tax amendment. However, based on the review of summarized balance sheets disclosed in the spin-offs' corporate filings, no capital gains arose during the four spin-offs that occurred in the Dongbu Group. Therefore, we concluded that the Dongbu Group considered non-tax factors more than tax factors while designing and executing the spin-offs. The local media posited during this period that these spin-offs may intend to resolve financial issues in the Dongbu Group, and this analysis was supported by the fact that some shares in the new spun-off companies were sold by the Dongbu Group. Our case studies provide evidence that all costs, including both tax and non-tax costs, must be considered in the course of spin-offs, in addition to the tax burdens on all parties involved in the corporate restructuring, which parallels the work of Scholes et al. (2008). This study provides implications that various aspects should be considered and reviewed in advance when the management makes decisions for effective tax planning.

• Management & Information Systems Review
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• v.35 no.4
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• pp.169-184
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• 2016

Deferred tax assets (liability) in a company's financial statements are to reflect the temporary difference between taxable income and accounting income and therefore can provide useful information as a proxy for discretionary accruals. In addition, deferred tax assets allow a company to manage its earnings by reviewing the feasibility of the assets' recognition. As such, this study focused on deferred tax assets to examine their relationship with discretionary accruals, which were measured by a modified Jones model (Dechow et al. 1995), and investigated the impact of audit quality on this relationship. In order to control for the effects of tax rate change and measurement credibility, deferred tax assets of 2,670 non-financial firms from 2009 to 2010 were collected as samples for the study. The results of the empirical analysis are as follows. First, the samples as a whole indicated that deferred tax assets have a negative relationship with discretionary accruals in a general sense, but a high-quality audit did not reveal a significant relationship between them. Second, the 1,379 samples with negative discretionary accruals did not reveal a significant relationship between deferred tax assets and discretionary accruals; however, the result showed a significant negative relationship under a high-quality audit. These findings suggest that in the case of negative discretionary accruals, a high-quality audit restricts an earnings management technique that utilizes deferred tax assets and that the assets can be a useful tool for detecting discretionary accruals. The present study is meaningful in that, unlike previous research, it combined the two contrasting roles of deferred tax assets-that of an earnings management detector and an earnings management tool-to examine their general relationship. The study also suggested that audit quality could influence the usefulness of deferred tax assets in providing information on discretionary accruals.

• Management & Information Systems Review
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• v.36 no.1
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• pp.215-232
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• 2017

[Purpose] The purpose of this study is to point out the issue of pensions and retirement income tax which were amended from 2012 to 2016 and present a rational and intellectual improvement to this issue. [Methodology] This study was carried out a literature survey about the tax laws of pension income and retirement income. In order to confirm the differences between the case-by-case tax burden, calculated the effect of tax burden by presenting the examples in the case of retirement income. [Findings] It is necessary to apply the differential multiples in accordance with the seniority when leaving the company rather than applying the five times or 12 times in the tax base as the current retirement income tax. Also, It should be given the flexibility of pension income to ease the requirements of inevitable temporary receipt of a pension income. In addition, it is needed to expand separate taxation threshold which is current 12 million won. Finally, the annual limit of tax incentives for IRP should be increased significantly more than the current 7 million won. [Implications] The improvement of the study is to offer suggestions on the revision of retirement income and pension income taxation to the tax authorities or National Pension Service and retirement pension providers. The result of this study is expected to be used as reference to develop policy options on the legislative process.

• Journal of Digital Policy
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• v.1 no.2
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• pp.25-40
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• 2022

This study analysed the effect of inheritance tax on households in reality and to improve it if there is an unreasonable aspect compared to countries around the world. The study conducted a one-on-one face-to-face survey on adults living in major cities across the country for 31 days from 1^st of September to 10^th of October, 2022. The collected data was analysed using SPSS 25.0 version and noted that 1) they preferred the abolition of inheritance tax, but hoped to improve it when maintaining it, 2) it was necessary to expand the deduction limit, abolish spouse deductions, and 3) prefer the inheritance acquisition tax system. Finally, it was found that they wanted to Extension of installment period of inheritance tax and introduce the tax deferred system.. This suggests that there is a perception that the overall revision of the inheritance tax system is necessary to maintain the inheritance tax. The significance of the study is to provide the basis for discussions on the improvement of the inheritance tax system in Korea, which does not reflect reality.

• Korean Business Review
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• v.17 no.2
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• pp.1-23
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• 2004

Since revision of Korean GAAP on the merge transaction in 1999, the few studies on the problems of the GAAP or on the inconsistency of GAAP and regarding tax regulations have been performed. The objective of this study is to understand the present state of the merge transactions, to find out the problems on the regarding GAAP and tax regulations, and to suggest the method to improve them. Among the 69 merge transactions of the listed and registered companies for the recent 3 years, 67 merge transactions are reported as the purchase transactions and 2 transactions as the pooling of interest. And 11 transactions occurred between parents and subsidiaries. I investigate the sufficiency of the foot disclosures on the merge transactions, I find out that the disclosure on the amortization of the negative goodwill are not sufficient, and several transactions are not recorded in conformity with GAAP. This paper indicates the problems on the GAAP as follows: the complicated and irrational method of amortization of the negative goodwill, the valuation of the stocks acquired before the merge, the inconsistent adjustments to purchase consideration contingent on future events, and the valuation of the merge between the parents and subsidiaries. And the problems on the tax regulations are as follows: tax deferment of the income from merge valuation, the ambiguous definitions of the fair value, and stock dividend of the income from merge valuation.